I have been thinking for a while about setting up a website for selling my prints. I am sure many of you here at CANP have websites selling your prints, and I have a few questions I am hoping you could answer for me:
1. Does a website selling your work count as a business? Do you get to deduct your photography-related expenses from your taxable income?
2. Do you have to register the website as a private business enterprise with the state of CA and/or other local bureaus? Does one require a "license to sell"?
3. Do you have to charge sales tax when selling to CA residents?
4. Does selling your work through "3rd party" websites like smugmug.com pro count as a business?
Any answers to the above would be much appreciated, thanks.
Kartik
Posted by Lon Overacker on January 29, 2008 at 8:38 PM
Kartik,
I'm neither a CPA, tax attorney, or for that matter have a successful photography business, so take my advice for what it's worth..... not much. :-)
In general, if you are making a "reasonable" attempt at selling a product - and have some reasonable record-keeping (invoices, receipts, inc/expense ledger, etc.) you certainly have a right to claim business losses (and income of course.)
Yes, a website would count as an expense to "operating" your business. All the costs involved including hosting, domain registration, etc. etc. even development costs. But there are considerations too, like depreciation of physical assets (your gear,) You can write off professional organization dues.
Yes, you can deduct photography related expenses from your taxable income. You'll be using Sched C.
I don't believe you have to physically register the website, but you should register your business with the State of CA and your local municipality.
Interesting side note.... I've been writing off expenses for a number of years and let my business license expire a number of years back. It's an auditing gambling game I've been playing and I plan on rectifying that this year. But the interesting and frankly scary point is that I received a notice from my local city government indicating that because I'm operating a business within the city limits, I needed to apply for a local license, fill out forms and pay fees....etc. What I want to know is, HOW THE HELL did the city get this information from my Federal or State returns??? I completely understand I need to file the proper paperwork and operate "legally," but how is it that the IRS and/or State tax office is sharing information on my return? Anyway.... off topic, sorry.
Yes, you should be charging sales tax. Assuming you're reporting the income to the state and claiming expenses. There is a nice benefit though registering and operating as a business. You can buy wholesale and NOT pay state sales tax on those purchases. But those purchase can only be used to operate your business.
4. As with #2, whether you're using your own site, smugmug or any other hosting service, that is not the business. Your business will require a business address, most likely your home address. The websites and associated expenses are just that, expenses incurred to operate the "business." Not sure if I'm explaining that right or if it makes sense.
1. Yes... if you offer your prints for sale, you are starting a business. You can write off photography related expenses from the income generated from your photography business. I suggest talking with a CPA or other tax professional.
2. I was asked if I had a website when I applied for my CA Sellers Permit, You will need a Sellers Permit and probably a City Business License if you live in the City. The Sellers Permit can be obtained from California State Board of Equalization. (they have a website with all the info and forms)
3. For print sales...Yes.
4. Business maybe...taxable income that you should report...yes.
If you are looking for more deductions from your regular (non-photography) income, that dog won't hunt. Photography business expenses can only be deducted from photography business income.
Posted by Sharon Menke on January 30, 2008 at 11:57 AM
I am in the process of setting up a store on my website now. If you need a great graphics designer, contact information is on my website: menkephoto.com
1) Yes and Yes
2) I needed to obtain a Fictitious Business Name and a Sales Permit.
3) Yes, you will need to charge tax to sales in California. You will also need a Seller's Permit to do that.
4) I don't post my photos on SmugMug or any other sites like that. It is way too easy for people to get your photos for free.
Discussion
3 repliesI have been thinking for a while about setting up a website for selling my prints. I am sure many of you here at CANP have websites selling your prints, and I have a few questions I am hoping you could answer for me:
1. Does a website selling your work count as a business? Do you get to deduct your photography-related expenses from your taxable income?
2. Do you have to register the website as a private business enterprise with the state of CA and/or other local bureaus? Does one require a "license to sell"?
3. Do you have to charge sales tax when selling to CA residents?
4. Does selling your work through "3rd party" websites like smugmug.com pro count as a business?
Any answers to the above would be much appreciated, thanks.
Kartik
I'm neither a CPA, tax attorney, or for that matter have a successful photography business, so take my advice for what it's worth..... not much. :-)
In general, if you are making a "reasonable" attempt at selling a product - and have some reasonable record-keeping (invoices, receipts, inc/expense ledger, etc.) you certainly have a right to claim business losses (and income of course.)
Yes, a website would count as an expense to "operating" your business. All the costs involved including hosting, domain registration, etc. etc. even development costs. But there are considerations too, like depreciation of physical assets (your gear,) You can write off professional organization dues.
Yes, you can deduct photography related expenses from your taxable income. You'll be using Sched C.
I don't believe you have to physically register the website, but you should register your business with the State of CA and your local municipality.
Interesting side note.... I've been writing off expenses for a number of years and let my business license expire a number of years back. It's an auditing gambling game I've been playing and I plan on rectifying that this year. But the interesting and frankly scary point is that I received a notice from my local city government indicating that because I'm operating a business within the city limits, I needed to apply for a local license, fill out forms and pay fees....etc. What I want to know is, HOW THE HELL did the city get this information from my Federal or State returns??? I completely understand I need to file the proper paperwork and operate "legally," but how is it that the IRS and/or State tax office is sharing information on my return? Anyway.... off topic, sorry.
Yes, you should be charging sales tax. Assuming you're reporting the income to the state and claiming expenses. There is a nice benefit though registering and operating as a business. You can buy wholesale and NOT pay state sales tax on those purchases. But those purchase can only be used to operate your business.
4. As with #2, whether you're using your own site, smugmug or any other hosting service, that is not the business. Your business will require a business address, most likely your home address. The websites and associated expenses are just that, expenses incurred to operate the "business." Not sure if I'm explaining that right or if it makes sense.
You may want to check the California Small Business Associations website. Tons of reading to put you to sleep, but valuable.
Lastly, you might want to post in the Marketing forum on NPN as well and get a broader audience.
Lon
2. I was asked if I had a website when I applied for my CA Sellers Permit, You will need a Sellers Permit and probably a City Business License if you live in the City. The Sellers Permit can be obtained from California State Board of Equalization. (they have a website with all the info and forms)
3. For print sales...Yes.
4. Business maybe...taxable income that you should report...yes.
If you are looking for more deductions from your regular (non-photography) income, that dog won't hunt. Photography business expenses can only be deducted from photography business income.
1) Yes and Yes
2) I needed to obtain a Fictitious Business Name and a Sales Permit.
3) Yes, you will need to charge tax to sales in California. You will also need a Seller's Permit to do that.
4) I don't post my photos on SmugMug or any other sites like that. It is way too easy for people to get your photos for free.
Good luck in your ventures.